Stock Borrowing & Lending allows investors to capture opportunities even if the market is going through a downward trend. Investor foresees the stock price will decline and borrow stock at target price with a loan interest and sell in the market. If the price dropped as predicted, investor can buy back that stock at a lower price and make profit with the price difference by deducting the trading and interest costs.
Comparing with warrants, the bid-ask spreads is lower in Stock Borrowing & Lending. When the stock is declining, investors can make profit without relying on the liquidity provided by distributors, also will not be affected by the factors of volatility and outstanding volume.
Stock Borrowing & Lending Process
Maintenance Margin is 115% of market value
If Tencent (#00700) price rises to $110
Margin ratio = 114% [125,000 / (110*1000), lower than 115%]
Since the margin ratio is lower than 115%, Margin deposit is needed.
Deposit amount= $11,250 [1.25 * (109 * 1000) - 125,000]
If Tencent (#00700) price falls to $90
Margin Ratio = 139% [125,000 / (90 * 1000), larger than 115%]
No margin deposit is needed.
|SBL Registration Fee||$300 (Include $270 First Registration Fee and $30 administration fee)|
|Administration Fee||$100 (Given that stock borrowing or lending is executed from January to June / July to December)|
|Loan Fee||Differ from stock and subject to minimum charge|
If you have any queries, please contact our customer service hotline (852) 2500 9199.